ACC 409 Ch. 14 questions with verified
answers passed
d. All of these are a focus of the auditor regarding reasonable estimates. - correct answer ✔✔In
evaluating the reasonableness of an estimate, the auditor would not normally concentrate on
which of the following factors and assumptions?
a. Subjective judgments that introduce bias.
b. Deviations from historical patterns.
c. Amounts that are inconsistent with current economic trends.
d. All of these are a focus of the auditor regarding reasonable estimates.
d. Checklists. - correct answer ✔✔Which of the following is a tool that is best used by the audit
team to determine if the client has included all disclosures?
a. Management representation letter.
b. GAAS.
c. Inquiry of the CFO.
d. Checklists.
b. Notify the audit committee about the violations, their circumstances, and the effects on the
financial statements. - correct answer ✔✔What should an auditor do when becoming aware of
violations of the FCPA (Foreign Corrupt Practices Act of 1977)?
a. Contact foreign officials in the country where the client has business operations.
b. Notify the audit committee about the violations, their circumstances, and the effects on the
financial statements.
,c. Contact the U. S. marshals.
d. Design internal controls to deter improper payments.
c. On information obtained from normal audit procedures performed to test management's
assertions. - correct answer ✔✔On what information does the auditor base a going concern
evaluation?
a. On separate procedures.
b. On the management discussion and analysis (MD&A).
c. On information obtained from normal audit procedures performed to test management's
assertions.
d. On the statement of cash flows for the current period.
d. Substantial doubt. - correct answer ✔✔The auditor is responsible for evaluating the
likelihood of a client not being a going concern for the next 12 months. What basis will the
auditor use to assess this issue?
a. Management integrity.
b. Control environment.
c. Absolute assurance.
d. Substantial doubt.
c. Both the planning and final review phases of the audit. - correct answer ✔✔During which of
the following phases of the audit are analytical review procedures required by the auditing
standards?
a. The planning phase of the audit.
b. The final review phase of the audit.
, c. Both the planning and final review phases of the audit.
d. Performance of tests of controls.
b. The chief executive officer and the chief financial officer. - correct answer ✔✔Which of the
following individuals should sign the management representation letter?
a. The members of the audit committee and board of directors.
b. The chief executive officer and the chief financial officer.
c. The chief financial officer and the treasurer.
d. The controller and the auditor.
a. A letter of audit inquiry. - correct answer ✔✔Which of the following items does the auditor
ask the client to send to its legal counsel requesting information about asserted claims?
a. A letter of audit inquiry.
b. A management representation letter.
c. A management letter.
d. A loss reserve confirmation.
b. Yielding to management's demands in order to promote additional service engagements. -
correct answer ✔✔An audit firm culture that emphasizes "doing the right thing" does not
incorporate which of the following to enhance audit quality?
a. Encouraging auditors to seek consultation with other member of the audit firm.
b. Yielding to management's demands in order to promote additional service engagements.
c. Taking sufficient time to deal with difficult client issues.
d. Emphasizing long-term reputation over the immediate satisfaction of client preferences.
answers passed
d. All of these are a focus of the auditor regarding reasonable estimates. - correct answer ✔✔In
evaluating the reasonableness of an estimate, the auditor would not normally concentrate on
which of the following factors and assumptions?
a. Subjective judgments that introduce bias.
b. Deviations from historical patterns.
c. Amounts that are inconsistent with current economic trends.
d. All of these are a focus of the auditor regarding reasonable estimates.
d. Checklists. - correct answer ✔✔Which of the following is a tool that is best used by the audit
team to determine if the client has included all disclosures?
a. Management representation letter.
b. GAAS.
c. Inquiry of the CFO.
d. Checklists.
b. Notify the audit committee about the violations, their circumstances, and the effects on the
financial statements. - correct answer ✔✔What should an auditor do when becoming aware of
violations of the FCPA (Foreign Corrupt Practices Act of 1977)?
a. Contact foreign officials in the country where the client has business operations.
b. Notify the audit committee about the violations, their circumstances, and the effects on the
financial statements.
,c. Contact the U. S. marshals.
d. Design internal controls to deter improper payments.
c. On information obtained from normal audit procedures performed to test management's
assertions. - correct answer ✔✔On what information does the auditor base a going concern
evaluation?
a. On separate procedures.
b. On the management discussion and analysis (MD&A).
c. On information obtained from normal audit procedures performed to test management's
assertions.
d. On the statement of cash flows for the current period.
d. Substantial doubt. - correct answer ✔✔The auditor is responsible for evaluating the
likelihood of a client not being a going concern for the next 12 months. What basis will the
auditor use to assess this issue?
a. Management integrity.
b. Control environment.
c. Absolute assurance.
d. Substantial doubt.
c. Both the planning and final review phases of the audit. - correct answer ✔✔During which of
the following phases of the audit are analytical review procedures required by the auditing
standards?
a. The planning phase of the audit.
b. The final review phase of the audit.
, c. Both the planning and final review phases of the audit.
d. Performance of tests of controls.
b. The chief executive officer and the chief financial officer. - correct answer ✔✔Which of the
following individuals should sign the management representation letter?
a. The members of the audit committee and board of directors.
b. The chief executive officer and the chief financial officer.
c. The chief financial officer and the treasurer.
d. The controller and the auditor.
a. A letter of audit inquiry. - correct answer ✔✔Which of the following items does the auditor
ask the client to send to its legal counsel requesting information about asserted claims?
a. A letter of audit inquiry.
b. A management representation letter.
c. A management letter.
d. A loss reserve confirmation.
b. Yielding to management's demands in order to promote additional service engagements. -
correct answer ✔✔An audit firm culture that emphasizes "doing the right thing" does not
incorporate which of the following to enhance audit quality?
a. Encouraging auditors to seek consultation with other member of the audit firm.
b. Yielding to management's demands in order to promote additional service engagements.
c. Taking sufficient time to deal with difficult client issues.
d. Emphasizing long-term reputation over the immediate satisfaction of client preferences.
